Legal basis: Article 271 of People's Republic of China (PRC) Maritime Code is applicable to the laws of the flag state. If the mortgage of a ship is established before or during the bareboat charter, the laws of the original country of registration shall apply.
Ship mortgage:
Definition 1: Ship mortgage refers to the right of the ship mortgagee to auction the ship provided by the mortgagor as a debt guarantee according to law when the mortgagor fails to perform the debt, and to receive priority compensation from the auction price of the ship. Ship mortgage loan is a widely used method of ship financing.
Definition 2: Ship mortgage refers to the creditor's right to take legal measures to get priority compensation from the ship price change provided by the debtor or a third party as debt guarantee when the debtor defaults.